Clean Innovations Ltd.

Revenue and Costs for 2052:

• Revenue: $3,500,000
• G&G Costs: $3,300,000
• Acquisition Costs: $16,000,000
• Exploratory Dry Holes: $18,000,000
• Successful Exploratory Wells: $16,500,000
• Development Wells, Dry: $8,000,000
• Development Wells, Successful: $7,800,000
• Production Facilities: $3,700,000
• Production Costs: $420,000

Amortization for 2052:

• SE: $990,000
• FC: $1,700,000

Accumulated DD&A:

• SE: $1,850,000
• FC: $6,000,000

Required:

1. Prepare income statements for a successful-efforts company and a full-cost company.
2. Prepare unclassified balance sheets for both companies.
3. Explain the difference in net income between the successful-efforts and full-cost companies.